SCOTTISH Green MSPs backed the minority SNP Government’s Budget yesterday, agreeing to support the higher tax and spending plans in return for commitments on local council services, and public- sector pay.

Derek Mackay also won the support of two LibDem MSPs after promising an extra £10.5 million for Orkney and Shetland’s councils to fund ferry services.

The Finance Secretary insisted he had struck a “deal that works for Scotland” and would build a “better country in the face of Tory cuts”.

But the Tories insisted the support for tax hikes would mean Scots paying more and getting less.

The tax changes will mean a new rate of 21p on earnings of between £24,001 and £43,430. The higher rate of tax for those earning £43,431-plus will be increased from 40p to 41p and the top rate, for those earning more than £150,000 per year, will rise from 45p to 46p. A new starter rate of 19p will be introduced for incomes of £11,850 to £13,850.

Mackay also announced plans to fix an anomaly in his original proposal, published last month. It meant that tax bills for some people earning between £43,535 and £58,500 would fall while others on slightly lower incomes would see theirs rise, due in part to changes in the personal allowance.

This will be overcome by changing the higher rate threshold to £43,430, rather than his initial proposal of placing it at £44,273.

The changes will generate at an additional £55m in taxation, it mean higher taxes for 400,000 people.

He promised that the tax increases would “deliver an additional £420 million to protect the NHS, to invest in Scotland’s public services and to support our economy.”

Mackay told MSPs: “A majority of people in Scotland – 55 per cent of them – will pay less tax than they would if they lived elsewhere in the UK, and 70 per cent of taxpayers will pay less than they do at the moment.

“As a consequence of our tax decisions, we will turn a real-terms cut in Scotland’s resource budget into growth for our public services. We will protect our public services by investing more in them.”

As part of the deal agreed with the Greens, the Scottish Government have promised all public-sector employees earning up to £36,500 that they will receive a minimum three per cent pay increase. This, the Government said, would include 80 per cent of NHS staff and the “vast majority” of teachers.

Tory finance spokesman Murdo Fraser attacked the Greens, accusing them of being a “subsidiary” of the SNP. He said: “You could have knocked me over with a feather when I heard the news a couple of hours ago. The ever-faithful Patrick Harvie has once again saved the Scottish National Party’s bacon; the always-willing Scottish Greens are there to do their masters’ bidding.

“The wholly-owned subsidiary has had its orders from head office and, after the usual pretence of playing hardball, with choreography that the greatest showman would be proud of, fell sweetly into line exactly as was planned all along.

“The price for that, of course, will be paid by hard-working Scottish taxpayers – not the high earners, but families that are struggling to get by, with Mr Mackay’s hand in one pocket and Patrick Harvie’s in the other.”

Harvie, the Greens’ co-convenor said the deal was another example of his party leading the way in Scottish politics.

“Last year we stopped the cuts; this year we’ve pushed the Government even further and delivered a real-terms increase in funding, including a fair contribution towards the additional pressures councils are facing. While other parties continue to posture from the sidelines, Greens are making Scotland fairer.”

However, Harvie gave Mackay “notice” that there would be no deal next year unless there was meaningful reform of local authority finances to give councils the “financial powers and flexibility” they need to stop them being so reliant on central government. “The imperative is clear – local tax reform is a priority which can wait no longer” Harvie said.